1. Field of the Invention
The present invention relates to processing magnetic indicia, and in particular, to methods and apparatus for processing misread or miskeyed magnetic indicia formed or stored on financial instruments.
2. Description of the Related Art
Checks are one of the most common forms of making non-cash payment. However, the processing of physical checks can be manually intensive and so it has become common for checks to be electronically processed. For example, when a customer makes a purchase at a merchant's point of sale terminal, the cashier scans the magnetic ink character recognition (MICR) characters printed at the bottom of a check using a check reader terminal. Alternatively, the customer or merchant may manually key in the MICR data. The MICR characters typically include the customer's checking account number. In addition, the MICR indicia can include the drawee bank's transit or routing number, and the check sequence number.
The cashier manually enters the check amount using the point of sale terminal. The cashier may also capture an image of the check. In addition, to provide greater security, some merchants obtain the customer's driver's license number or alternate ID by scanning the magnetic strip on the customer's driver's license or by keying in the driver's license or alternate number, or by having the customer key in their driver's license or alternate number. Alternatively, merchant's sometimes have websites, wherein the customer enters the MICR and ID data by keying in the data into an electronic form rather than via a point of sale store terminal.
The checking account number, other MICR data, the check amount, the driver's license number or alternate ID number, and other transaction related information may be sent to a check processing service. The check processing service then validates the information, and if the consumer authorized the transaction for automated electronic check processing, the check processing service submits the MICR data, including checking account number, check amount and other related information to a check clearinghouse, such as the Automated Clearing House Network (ACH). ACH provides for the inter-bank clearing of electronic payments for participating depository financial institutions. The customer's account is then debited for the amount of the check by the debited bank.
Unfortunately, the process of reading and decoding check MICR characters is often somewhat unreliable. In the case of manual entry, consumer and merchant input of the MICR line data can also be unreliable due to the transposing of numbers and/or the miskeying of the numbers. Indeed, it is estimated that about 10% of administrative check returns are the result of incorrect MICR readings or miskeying, also known as decoding errors. For example, if the MICR characters are misread or miskeyed, the check may be submitted to the wrong bank and will not be cleared. Alternatively, the check may be submitted to the correct bank, but with an incorrect account number, and so the check will not clear. The misreading or miskeying can be random, that is, it is not easy to predict the location or the character that will be misread or miskeyed, or how a misread or miskeyed character will be interpreted. Thus, even when check processors have attempted to research to resolve what the account number might be, the result is usually incorrect and the check fails to clear. Because the account number is not accurate, the check is simply never cleared, resulting in significant financial losses on the part of merchants or check processing company.